1. Transportation

Even when there are proper roads, transportation in Africa remains highly inefficient. Farmers often transport their goods themselves by train or bus. This practice is expensive because they lose days of work en route and by selling to individual customers at the market. It is also inefficient because they can only transport a limited amount of goods and the physical space occupied by passengers would be more profitably used by transporting extra cargo.

Although Africa has extensive natural river systems, (i.e. Nile, Congo, Limpopo, Orange, Niger and Zambezi) fluvial transportation remains undeveloped. The industry has historically been small because, due to unreliable electricity, Africa could not build shipbuilding capacity. Navigation was also hazardous because governments were financially incapable of conducting proper river surveys.

Today, entrepreneurs can revive fluvial transportation by opening small shipping yards powered by renewable energy. Whereas surveys used to be the domain of governments, companies using GPS and inexpensive sonar radar can create and sell high quality maps. Finally, using tablets and mobile banking, logistics services can reliably schedule pick up at remote stations.

To profit from the price differential between cities and villages, shippers can build electronic networks linking farmers and resellers. Farmers would be able to arrange for the pick-up of their crop, and shippers, by knowing when and what they will receive, can decide in advance in which market they will sell them. These shippers can take advantage of the newly built roads, river systems, the rapidly expanding rural Internet networks, and the wide adoption of mobile banking.

Irrigation systems, which include the construction of wells, the redirection of rivers and lakes, or the storage of rainwater, allow farmers to have a reliable supply of water in dry or rainy periods. Such systems are important in Africa because, apart from the strip of land that lounges the equator, the continent experiences infrequent and unpredictable precipitations.

For instance, most of Africa has dry and rainy seasons. Although warm temperatures allow for cultivation during the dry season, farmers cannot grow certain crops because they lack water. If they had access to irrigation, these farmers would be able to have multiple harvests, significantly increasing their income.

Entrepreneurs can seize this opportunity by selling inexpensive irrigation solutions to villages. In return, farmers will repay them from the increased profits from higher production.

Entrepreneurs can profit by signing long-term supply agreements with farm co-operatives, and then refrigerate vegetables, cook sauces, pack nuts, clean fruits, press juice… If operations are close enough to airports, products can also be cheaply exported. Shipping goods out of Africa is inexpensive because boats and planes, coming with consumer goods, often leave empty.

Entrepreneurs can buy, either individually or in a co-operative, machines in order to open micro-agrofactories. The following is a short list of machines that cost less than $20,000 that transfer typical African crops.

Governments’ solution was to bypass small landholders by opening large modern farms because they did not believe that small farmers could afford to buy modern machines. This approach failed because these large operations were managed by bureaucrats or foreigners who barely knew the land. In regions where agriculture is underdeveloped, it is essential to involve small landowners because, among other reasons, it fosters experimentation as each farmer tries new methods and crops, and successful practices are quickly copied.

A better approach is to share equipment via entrepreneurs who buy machines, from small power tools to sophisticated tractors, and rent them out to farmers. This “sharing economy” allows farmers to use tools that they cannot afford individually. Many of these machines require training to properly operate, training that can be expensive or inaccessible to illiterate farmers. A commercial service provider specializing in tool rental is also better able to maintain equipment and, by working with dozens of farmers, transfer successful practices.

Finally, unlike government sponsored farms, this profit-driven approach will ensure that only tools that can provide economic benefits will be purchased. Entrepreneurs, responding to clients’ demand, will probably start by renting simple tools, but as farms become more productive, more sophisticated machines will be made available.

Entrepreneurs can purchase and rent out machines to small farmers. This business will provide steady cash flow because, due to Africa’s long growing season, planting and harvesting occur throughout the year. Profits will be made from taking a share of the additional production.

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